Tether Involved in Illegal Financial Activities Scandal in China

Tether Involved in Illegal Financial Activities Scandal in China

On May 16, 2024, local Chinese media reported that law enforcement agencies in China have uncovered a banking network allegedly involved in illegal financial activities using the popular stablecoin, Tether (USDT).

The operation involved illicit transactions amounting to over $2 billion, spanning across 26 provinces, municipalities, and autonomous regions, and implicated 193 individuals. The investigation began in November 2022 after suspicions of fund settlements through a bank in the Longquanyi District, hinting at involvement in illegal foreign exchange activities. A task force composed of various departments was formed to conduct economic, cybersecurity, legal, and technical investigations.

On June 1, 2023, a coordinated operation led by the Ministry of Public Security and the Department of Public Security resulted in arrests in multiple cities. Twenty-five criminal suspects, including key figures Lin, Weng, and Chen, were apprehended, and evidence such as bank cards and payment tools was seized.

The criminal syndicate, led by Lin, Weng, Chen, and others, allegedly operated in the import-export business sector, utilizing USDT to provide illicit services to clients looking to transfer funds abroad undetected.

Tether Reaffirms Commitment to Combating Illegal Activities

In response to the scandal involving Tether in illegal activities, Tether's CEO, Paolo Ardoino, reaffirmed the company's commitment to combating illegal activities, describing Tether as "the dumbest choice for conducting illegal activities." Tether had previously frozen approximately $5.2 million USDT in response to crypto tracking and findings by the compliance platform MistTrack. They have also developed tools with Chainalysis to more effectively monitor secondary markets and detect suspicious or unauthorized transactions.

Conclusion

the recent scandal involving the use of Tether (USDT) in illegal financial activities in China has unveiled a significant criminal network operating across multiple regions, engaging in transactions worth over $2 billion. The extensive investigation by Chinese authorities, culminating in coordinated arrests and seizures, underscores the pervasive nature of this illicit activity. Despite these developments, Tether has reinforced its stance against illegal activities, with CEO Paolo Ardoino highlighting the measures taken to freeze suspicious funds and enhance transaction monitoring. This incident emphasizes the ongoing challenges and responsibilities faced by stablecoin issuers in maintaining the integrity and legality of their platforms.

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